5 Signs Your Subscription Business Is Outgrowing QuickBooks

Written by:

Erika Malzberg - Zuora

QuickBooks was designed to help you with bookkeeping, but the financial management needs of a subscription business go way beyond simple accounting. This doesn’t mean you need to ditch QuickBooks altogether, just that you need to supplement it with a subscription management system.

While many businesses start off with QuickBooks as their accounting system, it can quickly become a roadblock to efficient business operations. Eventually all subscription businesses reach a point at which QuickBooks isn’t sufficient to handle all of their complex subscription management needs. Case in point, SaaS management software company BetterCloud which added Zuora to its tech stack to take care of what QuickBooks couldn’t.

If you’re experiencing any of the following issues, it’s a clear sign that you’ve outgrown QuickBooks and need a supplemental subscription management system to support your business.

1. You spend a lot of time manually managing billing.

Billing is complex for subscription businesses. You’re not just selling one product with one price with one bill. Value-based billing that is usage-based is at the heart of subscription monetization (i.e. having customers pay for the services as they use them as a way to inherently communicate the value of your offerings).

But QuickBooks isn’t built to manage complex billing. With QuickBooks it’s very difficult to rate and bill for usage-based billing charges and other complex billing use cases. Without the right system, you’ll spend a lot of time manually calculating usage fees and billing for each of your customers. As your customer base grows, this becomes exponentially more complex, more time consuming, and less efficient for subscription management

2. SKU explosion.

Pricing for subscription businesses is dynamic. You should be able to create and easily roll out new subscription pricing and complex pricing packages on the fly. But QuickBooks isn’t set up to support tier-based pricing or volume-based pricing, both of which are key value-based pricing models for subscription businesses. Instead, with QuickBooks, every single tier is a separate product item, and therefore a separate SKU. This means you have to manage a ton of different SKUs for the same product line, just at a different quantity level.

SKU explosion is messy and inefficient and unnecessarily complex. You need the ability to create different rate plans for one SKU as opposed to a million different SKUs. You need pricing flexibility for optimal monetization.

3. Double order entry.

Every time a contract is closed in your CRM, do you have to double enter that same information all over again in QuickBooks? QuickBooks doesn’t have good integration with CRMs, and “add-on” programs are insufficient. You can’t just “Frankenstein” different systems together with a bandaid and hope that they’ll work. You need an integrated system that eliminates double entry. You need a more streamlined customer acquisition process that simplifies and automates order management at scale.

4. Redundant work managing contract changes.

When someone signs a contract, QuickBooks can create the billing schedule. But what happens when there are changes to that contract? What happens when the subscription is upgraded or downgraded, or when the subscriber adds on more units? Do you find yourself having to redo the original billing schedule?

If you’re doing a lot of manual work rebilling, regenerating invoices, and recalculating for new upgraded contracts, you’re wearing down your employees, hindering productivity, and exponentially increasing your vulnerability to financial errors which can lead to lost revenue, unhappy customers, and compliance risk.

5. Doing the “spreadsheet swivel” to get the metrics you need.

Subscriptions operate under a whole new set of metrics, from MRR to churn rate, retention rate, CLV, and more. You need easy access to these metrics for myriad purposes: board reporting, identifying upsell opportunities, and just to keep your fingers on the financial pulse of your business.

QuickBooks isn’t ready-built to serve up these metrics. Instead, you need to download data from QuickBooks and put it into another system in order to process the complex calculations you need to access these essential metrics. And the more you swivel from system to system, the more potential you have for introducing errors into your calculations, putting the integrity of these metrics at risk. Spreadsheets are no way for you to access metrics, or effectively manage any of your sophisticated business management operations.

As your subscription business grows, you need a system that can provide more than simple bookkeeping. You need a system that can support your business with pricing, customer acquisition, billing, and metrics. You need a system that automates and streamlines your finance function.

If you’re experiencing any of these signs that you’re outgrowing QuickBooks, learn how Zuora Central supports the entire order-to-cash process, from subscription orders to pricing, accounting, rating, global payments, subscription metrics, and more.